If you are in business as a sole proprietorship, you report your income and expenses on a Schedule C attached to your federal Form 1040 tax return when it is filed. If you are a corporation or a partnership, you typically file a Form 1120 or a Form 1065 tax return.
A Form 1120 tax return is filed on a yearly basis for corporations. A Form 1120S tax return is filed by corporations that have elected the “S” status. The income reported on an 1120S tax return typically flows through directly to the owner of the business. As a result, that income is taxed on the owners’ federal Form 1040 tax return. Corporations that have not elected or are not eligible for “S” status file Form 1120 tax returns. These companies must pay tax at the corporate level and the individual must then pay additional taxes on their Form 1040 tax returns.
A Form 1065 tax return is typically filed annually by partnerships. There is usually no federal income tax due from a partnership because the income flows through to the partners and is reported on their personal tax returns.
We understand that the burden the government places upon businesses is tremendous and is often difficult to handle. If your business has unfiled tax returns or has unpaid taxes, call us, we can help. Call Us Before the IRS Calls You!®
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